Week 7 ECO 103 Functions and Equations updated
Week 7 ECO 103 Functions and Equations updated
Economists
Economic Applications of Functions,
Equations & Graphical Illustrations.
REVENUE/COST/BREAK-EVEN ANALYSIS.
INCOME DETERMINATION.
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Equations
A mathematical statement setting two
algebraic expressions equal is called an
equation.
y = mx + b Linear
=0 Quadratic
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Functions
Y = f(X)
In a function, for each value of x, there can be
one and only one value of y.
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DEMAND-SUPPLY ANALYSIS
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Classwork 2
In a perfect market condition, a firm’s demand
and supply functions are given as:
P+-3Q -20 =0
P-3
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REVENUE/COST/BREAK-EVEN ANALYSIS
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Case One
Mr. AYAGET, a businessman, spends N2.5m to
set up a workshop where some items are
produced. If it costs N500 to produce an item
and the sale price of an item is N1,500, find
the minimum quantity of items to be
produced and sold for the businessman to
make a profit of:
i. At least N950,000
ii. At most N1,500,000
Solution
Let the product be Q
Profit = TR – TC
TC = FC + VC
FC = 2,500,000
VC = 500Q
TC = 2,500,000+500Q….. I
TR = P.Q
P= 1500
TR = 1500Q…… II
Profit = 1500Q- 2,500,000- 500Q = 1000Q-2,500,000
At least N950,000 At most N1,500,000
1000Q- 2,500,000 ≥ 1000Q- 2,500,000 ≤
950,000 1,500,000
Find Q? Find Q?
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